Wall Street Slips on Oil’s Big Drop

The fall in oil prices showed little sign of slowing as crude futures in New York continued their slide on Friday, falling for the sixth straight day and settling near a seven-year low.

Oil futures of American benchmark crude settled at $35.62 a barrel, down 3.1 percent, their lowest level since December 2008. At the time, during the depth of the recession, they dropped as low as $32.40 a barrel.

The drop on Friday pushed down the stocks of energy companies like Exxon Mobil, Chevron and Baker Hughes, the rig and oil services company. But the sell-off was broad, with all 10 sectors of the Standard & Poor’s 500-stock index ending down.

By the end of the day, the S.&P. 500 had lost 39.86 points, or 1.9 percent, to 2,012.37. That put it down 3.8 percent for the week, its worst showing since August.

The Dow industrial average was down 310 points, or 1.8 percent, to 17,265.21. The Nasdaq declined 111.71 points, or 2.2 percent, to 4,933.47.

Investors shifted money into government bonds, especially Treasuries. The yield on the 10-year note skidded to 2.13 percent from 2.23 percent late Thursday, a big move. The reasons for the sustained decline in oil this week — and through much of the year — differ from seven years ago, when economies around the world screeched to a halt. Now, demand is growing but energy markets are reacting to a glut of oil, driven in part by the strategy of Saudi Arabia and other major producers to pump flat out.

“There is incredible bearishness about the short-run prospects for oil as well as for the long-run prospects for oil,” said Jan Stuart, chief energy economist at Credit Suisse. “What’s the old saying — there are more sellers than buyers.”

Oil prices have dropped by nearly two-thirds in the past 16 months, but there were fresh developments behind this week’s decline. Talk that a ban on oil exports from the United States might be lifted and the victory of the opposition party in Venezuela were both interpreted as events that would encourage more production in the next few years.

But the biggest fundamental change in the oil market remains the decision by Saudi Arabia to force high-cost energy producers, particularly shale producers in the United States, out of the market by driving down prices.

Instead of acting as a swing producer and curtailing its output to keep prices from dropping, Saudi Arabia has focused instead on preserving its market share. The predictable result is a glut of oil that has filled up inventories.

Meeting in Vienna with other producers of the OPEC cartel last week, Saudi Arabia signaled once again that its full-tilt strategy would remain unchanged for the foreseeable future.

“What happened last week gave a green light to sell,” Mr. Stuart said.

The sustained drop in prices is starting to be felt among United States producers. For instance, the number of active rigs fell by the most in two months this week, according to Baker Hughes. The International Energy Agency also said on Friday that low prices were starting to take a toll on high-cost producers.

But the agency also said oil supplies were still expected to grow next year, which provided more incentive for sellers Friday.

“There is evidence the Saudi-led strategy is starting to work,” the agency said in its monthly energy report. Still, it concluded “there will still be a lot of oil weighing on the market” in 2016.

For consumers, the drop in oil has been a boon. Still, the energy agency warned of the long-term consequences of low energy prices. “Sustained low prices will not necessarily create benefits for importing countries in the longer run as it could complicate the transition to a low-carbon economy,” it said.

A version of this article appears in print on , on Page B3 of the New York edition with the headline: Wall Street Slips on Oil’s Big Drop . Order Reprints | Today’s Paper | Subscribe